Midcap information technology stock L&T Infotech could be a good investment opportunity for investors following the company’s robust third-quarter earnings, going by two major brokerages, which have recommended to ‘buy’ the share with up to 17 per cent upside. Motilal Oswal Institutional Equities and HDFC Securities are bullish on this S&P BSE Midcap stock. The former in its research note said that “a strong growth in the top account was led by a new project. In the ongoing consolidation here, management indicated that L&T Infotech is on the positive side. It is optimistic on continued growth momentum in this account.”
“Industry-leading growth and prudent capital allocation should defend rich multiples, in our view. We arrive at a fair valuation of 19x one-year forward price to earnings (P/E), at a 15 per cent discount to TCS. The results offer the comfort that client-specific issues faced over nine months of the calendar year 2019 (9MCY19) are largely behind. Moderating attrition also comes in as a positive. The recent large deal wins hint at strong growth over the next 12 months,” Motilal Oswal Institutional Equities in its research report said.
Motilal Oswal Institutional Equities has given a target price of Rs 2,260, a 17 per cent upside to the CMP of Rs 1,933.
Another top brokerage, HDFC Securities has maintained ‘BUY’ rating on L&T Infotech following in-line margin performance and around 7 per cent EPS increase. “We maintain our conviction on LTI based on (1) Broad-based vertical presence (sub-vertical strategy) with marquee ac, (2)Strong client mining programs and expanding deal pipeline (ramp-up schedule on track), (3) Improving alliance network/talent augmentation, and (4) Leading operational metrics in comparison to its peers. Growth momentum (YoY) to be intact, supported by a strong (sustainable) performance by large account (beneficiary in vendor consolidation),” Apurva Prasad and Amit Chandra, Analysts, HDFC Securities, said.
HDFC Securities has given a target price of Rs 2,090, around 8 per cent upside to the CMP of Rs 1,934.
Larsen & Toubro Infotech had reported a marginal increase in consolidated net profit to Rs 376.7 crore for the quarter ended December 2019, on Wednesday. The company had posted a net profit of Rs 375.5 crore in the same period a year ago. The company’s revenue grew 13.7 per cent to Rs 2,811.1 crore in the third quarter from Rs 2,472.9 crore in the year-ago period.